The JSE Securities Exchange exhibited a mood of defiant optimism on Tuesday morning when Telkom was floated on the bourse.
The exercise was repeated a few hours later on the floor of the New York Stock Exchange.
Telkom’s launch defied depressed markets, especially for telecommunications stocks. Media representatives were put firmly in their place. Like awestruck teenage fans of a boy band, they were consigned to a spot with no view of the proceedings and had to witness the event on a screen that frequently lost its signal.
Through gaps between guests’ shoulders, they documented the debut at R28. The share soon rose to R29,20, then slipped to R27,80, accounting for 23,5% of the day’s trades.
The share’s first three days have been a roller-coaster ride. On Wednesday it closed down 1,6%, but by lunchtime on Thursday it was up 1,3%. Meloy Horn, telecommunications analyst at Merrill Lynch, describes this as a ”reasonable” success, given the very difficult market. She notes that the downward-revised offering price made Telkom attractive relative to its peer group of emerging market telecom companies. The price was revised from a minimum of R33,50 to R28 on Monday night.
Government officials praised the spread of ownership that the listing brings. Of the 1,5-million who had registered to buy the shares, only 127 000 put down their money, leading to an allocation of 9% of the shares to local retail investors.
Press reports that Telkom would shed 10 000 jobs to boost earnings threatened to overshadow the listing.
”At no point did Telkom announce that it intends retrenching 10 000 workers,” Oupa Magashula, executive director for human resources at Telkom, told the Mail & Guardian this week.
The figure is an extrapolation based on an announcement by Belinda Williams, Telkom’s investor-relations manager, that the company’s ratio of employees to lines will have to improve.
It averages 125 fixed lines for each employee, though its international peers average 170 lines an employee. Improving the ratio to international standards would require Telkom to shed 10 000 posts.
Andrew Weldrick, Telkom’s media liaison officer, says one way to improve the ratio would be to increase the number of working lines. Telkom has disconnected about one million lines over the past five years to eliminate bad debt. Weldrick said many of the disconnected clients could not afford telephone service or were now using cellular phones.
He says Telkom would ”look to increase its lines in strategic areas”.
Magashula says a job security and retrenchment agreement the company signed in January last year requires extensive consultations before retrenchments. The agreement seeks to assist employees who have been retrenched for operational reasons if job losses become unavoidable.
He also says the company warns workers up to 12 months in advance if their jobs are under threat and that it is developing staff to be moved to growth areas.
Telkom has set up an agency for career opportunities after an agreement it signed with the Alliance of Telecommunications Unions last August. The agency helps workers who have been made redundant ”explore all career-development possibilities” and provides them with skills for new careers.
Mfanafuthi Sithebe, sector coordinator for the Communications Workers’ Union, dismisses Magashula’s undertakings. He says the union still believes that ”privatisation leads to job losses”.
Sithebe accuses Magashula of trying to cancel the job security and retrenchment agreement last November after the union had declared a dispute. The union’s president, Joe Chauke, intervened to stop the agreement being cancelled, he says.
”We characterise [the agency] as a bantustan affair. It takes illiterate African men, keeps them for years until they are frustrated, and then eventually retrenches them,” Sithebe says.
He says the training offered by the agency was not recognised by the South Africa Qualifications Authority.
Horn does not expect Telkom to cut jobs in the short term.
”It will become increasingly difficult to aggressively cut jobs, given the economic reality of the country,” she says.
Like Magashula, she expects natural attrition to be the main reason for shedding jobs in the years ahead.